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Building taxes create more revenue than budgeted

Commissioners President Gregory I. Snook said the money probably would be offset by an increase in construction costs.

Commissioners President Gregory I. Snook said the money probably would be offset by an increase in construction costs.

March 11, 2006|By TARA REILLY

WASHINGTON COUNTY - Two Washington County building-related taxes are estimated to generate $18.6 million in revenue for school, library, road and other construction projects.

The county budgeted $18.59 million in excise and transfer tax revenue to pay for some of the $83.1 million in construction projects listed in the proposed Capital Improvement Program (CIP) for fiscal year 2007.

Fiscal year 2007 begins July 1.

The revenue is about $3 million more than the county budgeted for the current fiscal year, which is fiscal year 2006. The current CIP lists excise and transfer tax revenue at about $15 million.

"I would say that's probably a little more than what we anticipated," Commissioners President Gregory I. Snook said by phone Wednesday of the new revenue projections.

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Snook, however, said the tax revenue probably would be offset by an increase in construction costs and state prevailing wage requirements.

Prevailing wage is a set wage for school building contractors. The wage is based on average wages in the region.

Snook said prevailing wage bumps up school construction projects by 10 percent to 15 percent.

Commissioner John C. Munson said he hopes the commissioners will cut taxes as a result of the increased revenue.

"Well, I hope we are," Munson said. "We haven't decided yet."

If that happened, the budget likely would be tight, but "it should be better than it was in previous years because the excise tax is there to help," Munson said.

Budget and Finance Director Debra Murray said the excise and transfer taxes have been an important source of funding for needed construction projects, such as road and school improvements.

"The excise tax has helped with the road projects and the school projects ... and without excise tax funding, it would be very hard to fund the programs," Murray said.

Without the taxes, Snook said the county would have to borrow money to pay for the projects.

"If we didn't have that, that will probably be money we would have to go to the bond market for," Snook said.

The excise tax is charged to new construction, and the transfer tax is charged when property changes hands.

The county anticipates $15.59 million in excise tax and $3 million in transfer tax revenue for the construction projects.

The excise tax revenue is based on an estimated 1,275 building permits being issued, Murray said.

Murray said the estimate is a little conservative in case the county experiences a slowdown in building. It's likely the number of permits issued will be a little higher, she said.

Of estimated excise tax revenue, $11.8 million is slated for school projects, according to the proposed CIP.

From fiscal years 2008 to 2012, the county estimates it will receive $59.92 million in excise tax revenue and $17.82 million in transfer tax revenue, according to the proposed capital program.

Other sources of funding for the capital budget include state and federal dollars and bond proceeds.

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